Susan’s mortgage application got rejected and she’s worried she’ll never get to own her own place, and mortgage broker Maddie Walton (right) is baffled by the result. (Source: Getty)
An Aussie woman has opened up about her heartbreak over being denied a home loan. Susan* worked hard to save up $60,000 over the last few years to buy her own place in Melbourne.
But at 43 years old, she was told that she likely wouldn’t be able to service a 30-year loan. Despite pulling in $110,000 a year, the woman told Yahoo Finance that that’s still not enough to get her over the line.
“I knew it would be hard at this age but I didn’t think it would be impossible. I’m still panicking,” she said.
The 43-year-old moved to Melbourne in 2018 with only $3,000 in the bank and wanted to “start fresh” after a break-up.
She was earning $80,000 at the time, but quit in 2021 to re-train and was able to score her now much-better paying job.
“I don’t have parents and I don’t have any living relatives for an inheritance,” she said.
“What I have now is 10 times what I used to and more than what my parents had growing up. We were dirt poor and they were full of addiction.
“I felt I had done what no one else in my family had – achieve a career in a professional industry, a sought-after industry.”
Susan said it was brutal trying to keep up with her rent and bills while squirrelling away what she had left in the hope it would one day get her a property.
“It’s just expensive living alone and starting again,” she told Yahoo Finance.
“Especially trying to socialise and make friends, stay fit and not become a shut-in. I’m pretty established now so I can start saving more but now I’m worried there isn’t a point past an emergency fund.”
Once she had the $60,000 saved up, she started looking for places in Melbourne.
She wanted a two-bedder, but would have settled for just one, and she hoped to be near a train line so she could easily get to work.
Susan went through a broker and was pre-approved for a $200,000 loan. The median price for an apartment in Melbourne is around $550,000, according to Canstar.
“The broker said with my age, expenditure and super balance they weren’t confident of my serviceability,” she said.
Undeterred, she went through a small, online lender and was rejected.
“[They] just said I spend too much to service it on paper, and that’s all they care about,” she added.
“For that reference, my expenses were $3,500 a month on a $6,000 income, but half of that is rent so not sure how they calculate that my free income of $2,500 is not feasible plus the release of the rent money I pay, which is about $1,500.
“So essentially I have approximately $3,700 a month, give or take on a mortgage.”
She said the only bit of debt hanging over her is a Student Financial Supplement Scheme (SFSS) loan, which is similar to a HECS debt, worth $22,000.
Susan told Yahoo Finance that she immediately panicked when she was knocked back for a loan as it made her question whether she would be forced to rent for the rest of her days.
“I’ll probably either buy a timeshare overseas and see if I can go back to my previous career to work remotely or buy student accommodation for the $250,000 I can afford,” she said.
“Being a number in an algorithm can be extremely trying and for me, as someone with little to no familial support, and refuse to ask anything of friends, it’s scary.
“I also have friends older than me that were able to secure a loan by borrowing temporarily from other friends or getting a temporary payday loan to bump their deposit.”
Mortgage broker Maddie Walton said she can’t believe someone like Susan would be knocked back for a loan or given only $200,000 for pre-approval.
Mortgage broker Maddie Walton said there are plenty of pathways for Aussies to get a home when they’re in their 40s and 50s. (Source: Supplied/Getty)
She crunched the numbers and said Susan should have been given at least $550,000 with her income and savings.
“I don’t understand what’s happened to this person. I don’t get it. I’ve done loans for people 50 years old and older,” she told Yahoo Finance.
“At the end of the day, all that lenders care about is they’re going to be paid back. What they have is something called an exit strategy.”
Aussies might use their superannuation as an exit strategy, sell their shares, or downsize and use the proceeds of the sale to pay off the remaining amount.
Whatever it is, lenders want to know how they’ll get their money.
But Walton explained that these strategies usually aren’t needed unless you’re over 50.
She added that at 43, Susan could still work for more than 25 years and could even shave years off her loan by:
But Pivot Property Buyers founder Henry Single told Yahoo Finance that smaller lenders might lower the exit strategy age to 45 because they’re more risk-averse.
Property buyer Henry Single said some Aussies could get the keys to their first home if they avoided a few simple issues. (Source: Instagram/Getty)
“I think a combination of the low deposit and being a little bit older, like, 43 is not old, but a little bit older, like on the cusp of when they would start wanting an exit strategy could be a factor in the rejection,” he said.
He added that monthly spending, while it isn’t massive, could have also played a role in what he called a “weak” application.
Canstar said “almost all lenders” will want an exit strategy if you’re over 55. Once you hit 60, a mortgage application has a high likelihood of being rejected unless you have a continuing source of income past retirement, or have assets you can sell to help repay the loan.
While Susan was worried about going to another broker or lender in case it affects her credit score, the Pivot Property Buyers founder said getting a third opinion can help get you across the line.
“Shop around and speak to multiple brokers and do your research, because although they all look the same, it’s actually not the case,” he said.
Experts believe that with the way the property market is operating at the moment, in tandem with the cost-of-living crisis, many people might not be able to retire because of their mortgage.
Multiple academics told NewsWire that creating a model on ‘how long will current mortgages take to pay off’ was too difficult an exercise. The Australian Bureau of Statistics said they couldn’t figure it out either.
But more and more Australians are undoubtedly reaching retirement without owning their home outright; whether they still have a slice of their mortgage, or they are renting.
Griffith University senior business lecturer, Di Johnson, says there are a host of “politically unpalatable” options which could have more retirees in homes they own.
Many Aussies could have to work into their 70s to pay off their mortgages before they retire. (Source: Getty)·Andrew Merry via Getty Images
“There’s wide-ranging policy implications on the mortgage market development in Australia. For example, long-term mortgages, rethinking age bias in responsible lending obligations, shared equity, social housing and tax changes – lots of politically unpalatable choices to make,” she said.
Census data shows from 2000 to 2020, the number of Australians aged 55 to 64 who owned their homes outright has plummeted from 64 per cent to 36 per cent.
Researchers with Housing For The Aged Action Group, Swinburne, Curtin and Western Sydney University used ABS data to publish a detailed analysis in 2023.
It showed the percentage of older people who own their own homes outright by age 55 had declined and the percentage of those reaching 55 years of age with mortgage debt had increased.
Susan hopes the banking system changes to a “more personalised approach to lending” so that people like her can secure the keys to their castles.
